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Trade unions ‘central’ to income equality

A stronger representation in the workplace could lead to significant progress on tackling in-work poverty and wage inequality, a new report suggests.

Published by the Smith Institute, ‘Just deserts: Poverty and income inequality’, examines the causes of low-wage growth and work poverty in the UK. It recommends statutory extension of collective agreements, the establishment of a corporate governance commission to reform company law, board level representation backed up by robust structures for employee participation, and reforms to executive pay.

The extensive use of fair-wage clauses in public contracts and an extended living wage could also help to solve the wages ‘crisis’, the report states.

David Coats, author and research fellow of the Smith Institute said: “The centre-left has an opportunity to revive an argument that has been treated with contempt for far too long – that workplace democracy can deliver fairer wages and more productive enterprises.

“The international evidence is compelling: those countries with a fairer distribution of incomes, like the Nordic Countries and the Netherlands, have an array of institutions which create an inclusive labour market with decent work for all. Works councils and trade unions, despite their weakened condition, remain central to the integrity of the German system. Britain presents a stark contrast, with an exceptionally low level of employee participation.”

Paul Hackett, director of the Smith Institute said: “This major new report examines the causes of low wage growth and in-work poverty in the UK and the decline of collective power in the workplace. It builds on the case for pre-distribution, and calls for a new deal at the workplace. It sets out a new policy agenda centred on a shift in power towards employees and their representatives to combat in-work poverty and income inequality.”

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